Q4 2023 T. Rowe Price Group Inc Earnings Call
Norma: www.globalonenessproject.org Good morning. My name is Norma, and I will be your conference facilitator today. Welcome to T. Rowe Price's fourth quarter 2023 earnings conference call. All participants will be in a listen-only mode until the question and answer period.
Yeah.
Good morning, My name is Martin and L. B.
Speaker Change: Well, you know fourth quarter 2023 earnings call.
Speaker Change: Oh I might jump in.
Norma: I'll give you instructions on how to ask questions at that time. As a reminder, this call is being recorded and will be available for replay on T. Rowe Price's website shortly after the call concludes. I'm going to now turn the call over to Lindsay Pruitt, T. Rowe Price's Director of Investment Relations. Please go ahead.
Speaker Change: Okay.
Speaker Change: Hi, I'm reminded this call this morning and will be available for replay.
Speaker Change: That's right.
Speaker Change: Not all of it.
Mhm.
Speaker Change: Direct revenue.
Speaker Change: Right.
Lindsay Pruitt: Hello, and thank you for joining us today for our fourth quarter earnings call. The press release and a supplemental materials document can be found on our Investor Relations website at investors.troweprice.com. Today's call will last approximately 45 minutes. Our CEO and President, Rob Sharps, CFO Jen Dardis, and Head of Global Investments, Eric Vial, will discuss the company's results for about 20 minutes, and then we'll open it up to your questions. We ask that you limit it to one question per participant.
Speaker Change: Hello, and thank you for joining us today for our fourth quarter earnings call. The press release and the supplemental materials documents can be found on our IR website at investors got T Rowe price dotcom.
Speaker Change: Today's call will last approximately 45 minutes, our CEO and president Rob Sharps CFO, John Dartos and head of global investments, Eric Vial will discuss the company's results for about 20 minutes and then we'll open it up to your questions. We ask that you limit it to one question per participant.
Lindsay Pruitt: I'd like to remind you that during the course of this call, we may make a number of forward-looking statements and reference certain non-GAAP financial measures. Please refer to the forward-looking statement language and the Reconciliations to GAAP in the supplemental materials, as well as in our press release. All investment performance references to peer groups on today's call are using Morningstar peers. Now I'll turn it over to Rob. Thank you, Lindsley, and thanks to all of you for joining us.
Speaker Change: Like to remind you that during the course of this call. We may make a number of forward looking statements and reference certain non-GAAP financial measures. Please refer to the forward looking statement language and the reconciliation to GAAP in the supplemental materials as well as in our press release.
Speaker Change: All investment performance references to peer groups on today's call are using Morningstar peer groups now I will turn it over to Rob.
Rob Sharps: Thank you Lindsay and thanks to all of you for joining us.
Rob Sharps: Before we get started, I want to share that in late November, Eric was named Head of Global Investments in recognition of his strong leadership as well as his extensive investment. I know he will continue to focus on pursuing superior outcomes for us, and both Jen and I congratulate him on his expanded role. Eric will provide today's update on our investment organization, followed by Jen, who will cover our financial results. With that, I will turn to 2023 results.
Rob Sharps: Before we get started I want to share that in late November Eric was named head of global investments in recognition of his strong leadership as well as his extensive investment experience.
Rob Sharps: I know he will continue to focus on pursuing superior outcomes for our clients and both Jan and I congratulate him on his expanded role.
Rob Sharps: Eric will provide today's update on our investment organization.
Eric Vial: Led by Jen, who will cover our financial results.
Eric Vial: With that I will turn to 2023 results.
Rob Sharps: While 2023 was a challenging year for us with substantial net out, it also brought Investment Performance improved, and we advanced important work to ensure our firm is positioned for future growth. We are already seeing a number of early indicators that support our confidence that better days are ahead.
Eric Vial: While 2023 was a challenging year for us with substantial net outflows. It also brought progress.
Eric Vial: <unk> performance improved and we advanced important work to ensure our firm is positioned for future growth.
Eric Vial: We are already seeing a number of early indicators that support our confidence that better days are ahead.
Rob Sharps: We have a long and solid track record of putting clients first and pursuing excellence, and as we near our 88th anniversary, I am confident that we will build on this tradition, delivering compelling value for our clients, our associates, and our shareholders. As I mentioned, we made meaningful progress against our strategic priorities in 2023. Our active ETF business is gaining traction, with assets under management exceeding $2.7 billion at the end of January. We launched the T. Rowe Price OHA Select Private Credit Fund, or O-Credit, with over $1.5 billion of investable capital, and are in the early stages of bringing this product to the wealth management channel. We acquired Retiree, Inc., to enhance our ability to expand and retain relationships with pre-retiree and retiree clients by providing tax-aware retirement income and social security claiming strategies.
Eric Vial: We have a long and solid track record of putting clients first and pursuing excellence.
Eric Vial: We near or 88, the anniversary I am.
Eric Vial: Confident that we will build on this tradition.
Eric Vial: Delivering compelling value for our clients, our associates and our shareholders.
Eric Vial: As I mentioned, we made meaningful progress against our strategic priorities in 2023.
Eric Vial: Our active ETF business is gaining traction with assets under management over $2 $7 billion at the end of January.
Eric Vial: We launched the T Rowe price Ohh select private credit fund or Oh credit with over one and a half a billion dollars of investable capital and are in the early stages of bringing this product to the wealth management channel.
Eric Vial: We acquired retiree, Inc to enhance our ability to expand and retain relationships with pre retiree and retiree clients by providing tax aware retirement income and social security, claiming strategies.
Rob Sharps: This acquisition demonstrates our commitment to broadening and evolving our already strong retirement capabilities and deepens our position as a retirement leader. We partnered with the International Finance Corporation to create the T. Rowe Price Emerging Markets Blue Economy Bond Strategy, a pioneering blue bond strategy that will focus on private companies operating in emerging markets. We expanded our capital appreciation suite with the launch of the T. Rowe Price Capital Appreciation and Income Fund for Investors Seeking an Income-Oriented Fund. We have an industry-leading position at our target date, with strong investment performance and net inflows of $13.1 billion last year, building on this. We continue to innovate and add new capabilities, including moving beyond accumulation. The engagement and collaboration among our investment teams got back to what I would characterize as a healthy pre-pandemic level. Our culture thrives on the energy around our teams engaging with corporate management, traveling together, and debating Risks and Opportunities.
Eric Vial: This acquisition demonstrates our commitment to broadening Andy involving our already strong retirement capabilities and deepens our position as a retirement leader.
Eric Vial: We partnered with the International Finance Corporation to create the T Rowe price emerging markets Blue economy bond strategy.
Eric Vial: A pioneering blue bond strategy that will focus on private companies operating in emerging markets.
Eric Vial: We expanded our capital appreciation suite with the launch of the T. Rowe price capital appreciation and income fund for investors seeking an income oriented funds.
Eric Vial: We have an industry leading position in our target date franchise with.
Eric Vial: With strong investment performance and net inflows of $13 $1 billion last year.
Eric Vial: Building on this strength, we continue to innovate and add new capabilities, including moving beyond accumulation.
Eric Vial: The engagement and collaboration among our investment teams got back to what I would characterize as healthy pre pandemic levels.
Eric Vial: Our culture drives on the energy around our teams engaging with corporate management teams travelling together and debating risks and opportunities.
Rob Sharps: This is how our investment platform delivers its best for clients. We are evolving as markets and our clients demand, and we are ready to compete with additional vehicles, new capabilities, and new experiences. Leading indicators support our confidence that there will be a slower pace of net outflows this year.
Eric Vial: This is how our investment platform delivers its best for clients.
Eric Vial: We are evolving as markets and our clients demand more.
Eric Vial: And we are ready to compete with additional vehicles new capabilities add new experiences.
Eric Vial: Leading indicators support our confidence that there will be a slower pace of net outflows this year.
Rob Sharps: We are seeing improved performance in large-cap growth and expect that the rebound in 2023 will reduce redemptions in 2024. Key elements of strategic initiatives are delivered. We're seeing improving growth sales in our individual investors, with Q4 having the highest gross sales of any quarter over the last two years. We saw positive momentum for net flows in our U.S. wealth management platform segment in Q4. And in EMEA, we were recently selected by a large UK wealth management firm to manage a custom multi-asset portfolio.
Eric Vial: We are seeing improved performance in large cap growth funds and expect that the rebound in 2023 will reduce redemptions in 2024.
Eric Vial: Key elements of strategic initiatives are delivering.
Eric Vial: We're seeing improving gross sales in our individual investor channel with Q4, having the highest gross sales of any quarter over the last two years.
Eric Vial: We saw positive momentum for net flows in our U S. U S wealth management platform segment in Q4.
Eric Vial: And in EMEA.
Eric Vial: We were recently selected by a large UK wealth management firm to manage a custom multi asset income fund.
Rob Sharps: Despite a challenging year, our balance sheet remains solid, with $2.5 billion of cash and discretionary investment at the end of 2020. We continue to prioritize the dividend while maintaining ample liquidity to support our seed capital program, opportunistic buybacks, and potential M&A. We recently announced a quarterly dividend of $1.24, which increased for the 38th consecutive year. I want to underscore that the progress I've highlighted is a result of our associates' commitment to investment expertise, to superb clients, and to driving our corporate strategy forward. We are grateful for their hard work and are confident that together we will return the firm to organized. I'll now turn to Eric.
Eric Vial: Despite a challenging year, our balance sheet remains solid with $2 $5 billion of cash and discretionary investments at the end of 2023.
Eric Vial: We continued to prioritize the dividend, while maintaining ample liquidity to support our seed capital program.
Eric Vial: Opportunistic buybacks and potential M&A.
Eric Vial: We recently announced a quarterly dividend of $1 24, which increased for the 38th consecutive year.
Eric Vial: I want to underscore that the progress I've highlighted as a result of our associates commitment to investment excellence to superb client service and to driving our corporate strategy forward.
Eric Vial: We're grateful for their hard work and are confident that together, we will return the firm to organic growth.
Eric Vial: I'll now turn to Eric.
Eric Vial: Thank you, Rob. After retreating in the third quarter, both equity and fixed income markets rebounded in the latter part of the fourth quarter, resulting in strong calendar year returns in most industries. Across asset classes, we delivered solid investment performance. 64% of our funds beating their peer group medians for the, Strong equity performers included our U.S. Equity Research Fund, Capital Appreciation Fund, and Mid-Cap Value Fund, which are top quartile performers for the 1-, 3-, 5-, and 10-year time period. 2023 also marked the 16th year that our Capital Appreciation Fund, managed by David Giroux, beat its Morningstar peer group average, tying the record for the most consecutive calendar years a U.S. equity or multi-asset fund has done so under the same portfolio, Our three large-cap growth equity funds all delivered top quartile one-year performance in 2023, turning around the performance challenges of 2022 that have driven recent out... And while over 60% of the return for the Russell 1000 growth benchmark came from the seven largest names in 2020.
Eric Vial: Thank you Rob after treating in the third quarter, both equity and fixed income markets rebounded in the latter part of the fourth quarter, resulting in strong calendar year returns in most indices across asset classes, we delivered solid investment performance with 64% of our funds, beating their peer group mediums for the year.
Eric Vial: Strong equity performers included our U S equity Research fund capital appreciation fund and mid cap value fund, which are top quartile performers for the 135 and 10 year time periods two.
Eric Vial: 2023 also marked the 16th year that our capital appreciation fund managed by David Drew beat its Morningstar peer group average tying the record for the most consecutive calendar years of U S equity or multi asset fund has done so under the same portfolio manager.
Eric Vial: Our three large cap growth equity funds all delivered top quartile one year performance in 2023, turning around the performance challenges of 2022 that have driven recent outflows and while over 60% of the return for the Russell 1000 growth benchmark came from the seven largest names in 2023, our large cap growth strategies.
Eric Vial: Our large-cap growth strategies delivered alpha from a much wider set of fundamental investments. Strong performance in our target date suite continued, with all vintages of both the flagship retirement suite and the newer blend suite beating their peer group medians for the year. Overall, our multi-asset products had a strong year, with just over half of the funds in their top quartile for the year. Our fixed income franchise had a solid year, with 60% of the funds beating their peer group median. Several of our non-investment-grade funds, including high-yield, international, low-duration, and muni funds, were all top quartile performers for the year. Most notably, Global Multisector Bond Fund was the top performer in its peer group for the year, adding to its five- and ten-year top deciles. Investment performance across our alternatives platform was strong in 2020, with Liquid Strategies outperforming their benchmarks, and Private Strategies generating attractive absolute performance. For more information, visit liquidstrate.com. For more information, visit liquidstrate.com.
Eric Vial: Livered alpha from a much wider set of fundamental investment choices.
Eric Vial: Strong performance in our target date suite continued with all vintages of both the flagship retirement suite and the newer blend sweet beating their peer group mediums for the year overall, our multi asset products had a strong year with just over half of the funds in their top quartile for the year our.
Eric Vial: Our fixed income franchise had a solid year with 60% of the funds, beating their peer group mediums several of our non investment grade funds, including high yield international low duration and Muni funds were all top quartile performers for the year.
Eric Vial: Most notably global multi sector Bond fund was the top performer in its peer group for the year, adding to its five and 10 year top decile performance.
Eric Vial: Investment performance across our alternatives platform was strong in 2023 with liquid strategies outperforming their benchmarks and private strategies generating attractive absolute performance.
Eric Vial: I want to share a few highlights about our investors. As a fundamental research-driven investment organization, our over 900 investment professionals around the globe adhere to our rigorous investment process and leverage insights generated by our research. Over the last 10 years, we've more than doubled the investment professional ranks, including the scale-up for Terpim and the addition of OHS. We saw very little turnover in the past year, with an average portfolio manager tenure at T. Rowe of 17 years. Importantly, as Rob referenced, our team engagement is back to pre-pandemic levels. We conducted over 14,000 due diligence meetings last year. Thanks in large part to our proprietary in-house corporate access capability, the majority of these meetings were held in person.
Eric Vial: I wanted to share a few highlights about our investment platform as a fundamental research driven investment organization, our over 900 investment professionals around the globe adhere to our rigorous investment process and leverage insights generated by our research platform over the last 10 years, we've more than doubled the investment professional ranks, including the scale up for turbine.
Eric Vial: And the addition of OE, Jay we saw very little turnover in the past year with average portfolio manager tenure at T. Rowe of 17 years importantly, as Rob referenced our team engagement is back to pre pandemic levels. We conducted over 14000 due diligence meetings last year and thanks in large part to our proprietary in house CT.
Eric Vial: Access capabilities. The majority of these meetings were held in person are analysts and Pms engaged in field research trips large and small for example, 48 members of our emerging markets teams spend one week traveling across China digging deep on key topics across the technology industrial and consumer sectors.
Eric Vial: Our analysts and PMs engage in field research trips large and small. For example, 48 members of our Emerging Markets team spend one week traveling across China, digging deep on key topics across the technology, industrial, and consumer sectors. The strength of a research platform can be seen in our U.S. equity research strategy, with over 25 TRPA analysts contributing to the portfolio in their focus areas of expertise, their insights delivering for: In addition to the top quartile performance versus peers I mentioned earlier, it has demonstrated its ability to generate alpha over time with less tracking. We have broadened this approach and now offer a global equity research strategy that leverages the insights of over 75 global entities. Our investment data insights team, in collaboration with our data science team, is generating ideas and enabling our investment professionals to be more efficient by leveraging capabilities like large language models to improve the delivery of data and insights to our portfolio managers and analysts.
Eric Vial: The strength of our research platform can be seen in our U S equity research strategy with over 25, TRP analysts contributing to the portfolio and their focus area of expertise their insights delivered for clients. In addition to the top quartile performance versus peers I mentioned earlier it has demonstrated its ability to generate alpha over time.
Eric Vial: I'm with less tracking error, we have broadened this approach and now offer a global equity research strategy that leverages the insights of over 75 global analysts.
Eric Vial: Our investment data insights team in collaboration with our data science team is generating ideas and enabling our investment professionals to be more efficient by leveraging capabilities like large language models to improve the delivery of data and insights to our portfolio managers and analysts our research dot AI generative AI tool is in beta test.
Jen Dardis: Our research.ai generative AI tool is in beta test with 80 investment professionals and represents a promising start to what is sure to be a continued investment in the, We recently established an equity solution that will allow us to deliver customized versions of our fundamental equity investment strategies for large clients tailored to their specific needs. This capability builds upon the strong success of our integrated equity team, which combines fundamental and systematic processes and has demonstrated strong results across a wide variety of strategies, including U We are also responding to client demand and developing new products like the T. Rowe Price Emerging Markets Blue Economy Bond Strategy that Rob. Pursuing excellent investment performance for our clients remains our top priority. The depth and breadth of our investment platform, which is rooted in our three pillars of people, process, and culture, gives us the tools to be able to do that. I'll now turn it over to Jen to cover our front.
Eric Vial: With eight investment professionals and represents a promising start toward is sure to be a continued investment in this area.
Eric Vial: We recently established an equity solutions capability that will allow us to deliver customized versions of our fundamental equity investment strategies for large clients tailored to their specific objectives. This capability builds upon the strong success of our integrated equity team, which combines fundamental and systematic processes and has demonstrated strong results.
Eric Vial: It's across a wide variety of strategies, including U S small cap growth.
Eric Vial: Smid cap core large cap value and global core and.
Eric Vial: Our ESG teams continue to help our portfolio managers make informed decisions by understanding the risks and opportunities related to ESG and how they may impact. The company's performance. We are also responding to client demands and developing new products like the T. Rowe price emerging markets Blue economy bond strategy that Rob mentioned.
Eric Vial: Pursuing excellent investment performance for our clients remains our top priority the depth and breadth of our investment platform, which is rooted in our three pillars of people process and culture gives us the tools to be able to do so.
Jen Dardis: Thank you, Eric. I'll review our financial results and then we will open the line for questions. Our adjusted earnings per share for Q4 2023 was $1.72, bringing us to $7.59 for the year. 2023 was down from $8.02 in 2022 from lower average AUM and investment advisory revenue and higher expense. We had $28.3 billion in net outflows this quarter, bringing full-year outflows to $81.8 billion.
Eric Vial: I'll now turn it over to Jim to cover our financials.
Jim: Thank you Eric I'll review, our financial results and then we will open the line for questions.
Jim: Our adjusted earnings per share for Q4, 2023 was $1 72.
Jim: Bringing us to $7 59 for the year.
Jim: 2023 was down from $8 <unk> in 2022 from lower average AUM and investment advisory revenue and higher expenses.
Jim: We had $28 3 billion and net outflows this quarter, bringing full year outflows to $81 8 billion.
Jen Dardis: During the fourth quarter, we had a handful of large redemptions in our sub-advisory and institutional channels that elevated net output. From an asset class perspective, U.S. equity continues to be the main driver of net outflows. In our DC channel, stable value posted sizable net outflows in 2023 after delivering strong positive net flows in 2022, a sign that retirement investors may be seeking higher yield or reorienting toward a risk approach. We are seeing encouraging signs in our smaller ticket retail business with improving net flows in both our direct and intermediary channels. Our target date suite ended the year with $13.1 billion of positive net flows, and alternatives also posted positive flows for the year. Additional detail on alternative flows can be found on page 20 of the annual version of our supplemental materials.
Jim: During the fourth quarter, we had a handful of large redemptions in our sub advisory and institutional channel that elevated net outflows.
Jim: From an asset class perspective U S equity continued to be the main driver of net outflows.
Jim: And our D C channel stable value posted sizeable net outflows in 2023 after delivering strong positive net flows in 2020 to assign that retirement investors may be seeking higher yield or reorienting towards our risk appetite.
Jim: We are seeing encouraging signs in our smaller ticket retail business with improving net flows in both our direct and intermediary channels.
Jim: Our target date suite ended the year with $13 1 billion of positive net flows and alternatives also posted positive flows for the year.
Additional detail on alternatives flows can be found on page 20 of the annual version of our supplemental materials.
Jim: There are also some signs of strength across our individual equity and fixed income products with capital appreciation all cap opportunity international core and global multi sector bond all delivering over 1 billion in positive net flows in 2023.
Jen Dardis: There are also some signs of strength across our individual equity and fixed income products, with Capital Appreciation, All Cap Opportunities, International Core, and Global Multisector Bond all delivering over $1 billion in positive net flows in 2023. Looking at our income statement, Q4 adjusted net revenues were $1.7 billion for the quarter, bringing our full-year adjusted total revenue to $6.5 billion. Our Q4 investment advisory revenue of about $1.5 billion was higher than Q4 of last year, but the $5.7 billion earned for the full year was lower than 2022 overall based on the trend in average assets. Our effective fee rate of 42.2 basis points in Q4 was up due to a little over $25 million in performance-based fees, predominantly on alternative products that crystallized in the fourth quarter. Without these performance-based fees, our Q4 effective fee rate would have been more in line with the Q3 2023 fee rate. Turning to expenses, Q4 adjusted operating expenses were $1.2 billion.
Jim: Looking at our income statement Q4, adjusted net revenues were $1 7 billion for the quarter, bringing our full year adjusted total revenue to $6 5 billion.
Jim: Our Q4 investment advisory revenue of about $1 5 billion was higher than Q4 of last year, but the $5 7 billion earned for the full year with lower than 2022 overall based on the trend in average assets.
Jim: Our effective fee rate of 42.2 basis points in Q4 was up due to a little over $25 million in performance based fees predominantly on alternatives product that crystallized in the fourth quarter.
Jim: Without these performance based fees, our Q4 effective fee rate would have been more in line with the Q3 2023 fee rate.
Jim: Turning to expenses Q4, adjusted operating expenses were $1 2 billion.
Jim: As I mentioned last quarter Q4 included higher expenses compared to Q3 related to seasonal advertising and promotion stock based compensation and professional fees.
Jim: Equity markets improved in 2023, we increased the investment in our brand to support future growth.
Jen Dardis: As I mentioned last quarter, Q4 included higher expenses compared to Q3 related to seasonal advertising and promotion, stock-based compensation, and professional development. As equity markets improved in 2023, we increased the investment in our brand to support future growth. Q3 2023 also included a non-recurring benefit in GNA. Full year 2023 adjusted operating expenses, excluding the carried interest expense, were $4.19 billion, up 3% over 2022's $4.07 billion and within the previously provided 2023 guidance range of 2 to 4%.
Jim: Q3, 2023 also included a nonrecurring benefit in G&A expenses.
Jim: Full year 2023, adjusted operating expenses, excluding the carried interest expense were $4 one $9 billion.
Jim: Up 3% over 2020 to $4 7 billion and within the previously provided 2023 guidance range of 2% to 4%.
Jim: Based on average market conditions over the last quarter. We expect 2024 adjusted operating expenses, excluding carried interest expense to be up 3% to 5% over 2023 419 billion.
Jim: This is up slightly from previously provided 2024 guidance due to the increase in equity markets and the impact. This is expected to have on our market share and expenses in 2024.
Jen Dardis: Based on average market conditions over the last quarter, we expect 2024 adjusted operating expenses, excluding carried interest expense, to be up 3 to 5 percent over 2023's $4.19 billion. This is up slightly from previously provided 2024 guidance due to the increase in equity markets and the impact this is expected to have on our market-driven expenses in 2024. We anticipate the 2024 non-gap effective tax rate will be in the range of 23 to 26%, reflecting lower expected valuation allowances related to our UK-based business and a lower state tax rate associated with income apportionment rules in certain jurisdictions.
Jim: We anticipate that 2024, non-GAAP effective tax rate will be in the range of 23% to 26%, reflecting lower expected valuation allowances related to our U K based business and a lower state tax rate associated with income apportionment rules in certain jurisdictions.
Jim: Despite a challenging year, we remain committed to maintaining our strong balance sheet and returning capital to stockholders.
Jim: We bought back $103 million worth of shares during the fourth quarter, bringing 2023 total buybacks to $254 million and we've continued to buy back shares during the start of 2024.
Jim: As Rob mentioned last week, we announced a quarterly dividend of $1 24 per share of <unk> <unk> per share increase.
Jim: Between the dividend and buybacks. We've returned 138 billion to stockholders over the course of 2023, while also increasing our cash position over $300 million from the end of 2022.
Jen Dardis: Despite a challenging year, we remain committed to maintaining our strong balance sheet and returning capital to stockholders. We bought back $103 million worth of shares during the fourth quarter, bringing 2023 total buybacks to $254 million, and we've continued to buy back shares during the start of 2024. As Rob mentioned, last week, we announced a quarterly dividend of $1.24 per share, a $0.02 per share increase.
Jim: This strong financial position allows us continued flexibility to support annual dividend and to pursue opportunistic share buybacks.
Jim: Also strategically investing in seed capital or M&A as opportunities arise.
Jim: We remain focused on proactively managing our expenses to allow for the continued investment in our strategic priorities, while ensuring our cost structure is appropriate for the size and scale of the firm.
Jim: This financial discipline, along with our commitment to efficiency and process improvement positions us to fund our future growth through modest increases in expenses and the reallocation of existing expenditures.
Operator: Between the dividend and buybacks, we've returned $1.38 billion to stockholders over the course of 2023, while also increasing our cash position over $300 million from the end of 2022. This strong financial position allows us continued flexibility to support the annual dividend and to pursue opportunistic share buybacks, while also strategically investing in seed capital or M&A as opportunities arise. We remain focused on proactively managing our expenses to allow for the continued investment in our strategic priorities while ensuring our cost structure is appropriate for the size and scale of the business. This financial discipline, along with our commitment to efficiency and process improvement, positions us to fund our future growth through modest increases in expenses and the reallocation of existing expenditures. With that, I'd like to ask the operator to open the line for questions. Thank you. To ask a question, you'll need to press star 1-1 on your telephone.
Speaker Change: With that I'd like to ask the operator to open the line for questions.
Speaker Change: Thank you.
Speaker Change: To ask a question you will need to press star one on your telephone towards draw. Your question. Please press Star one again, please wait for your name to be announced.
Speaker Change: We ask that you please limit your questions to one.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: One moment for your first question.
Speaker Change: Okay.
Our first question comes from the line of Dan Fannon with Jefferies. Your line is now open.
Daniel Thomas Fannon: Thanks, Good morning, Rob I was hoping you could.
Daniel Thomas Fannon: We can enhance or expand upon your comments around 2024 improvements I think you highlighted some gross sales trends in 2000, and the fourth quarter, improving plus we know investment performance has gotten better. So curious about maybe the sales profile as we start the year, our redemptions, maybe you're tracking in just a little more color around the Pos.
Daniel Thomas Fannon: Outlook.
Daniel Thomas Fannon: Hey, Dan Good morning, Thank you for the question.
Speaker Change: Our base case for 2024 is that we will have outflows.
Operator: To withdraw your question, please press star 1-1 again. Please wait for your name to be announced. We ask that you please limit your questions to one. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question comes from the line of Dan Fannon with Jeffries. Your line is now open. Thanks. Good morning.
Dan: But we do expect improvement from 2023.
Speaker Change: First the investment strategies with the most substantial outflows in 2022 and 'twenty three had much better performance in 2023.
Speaker Change: That should translate into lower client redemptions and improve sales over time and in fact.
Rob Sharps: Rob, I was hoping you could enhance or expand upon your comments around 2024 improvements. I think you highlighted some gross sales trends in the fourth quarter that were improving. Plus, we know investment performance has gotten better. So, curious about maybe the sales profile as we start the year, how redemptions maybe are tracking, and just a little more color around the positive outlook. Dan, good morning.
Speaker Change: We are seeing.
Speaker Change: Evidence of that already.
Speaker Change: Getting to see improvements in gross sales in some of those strategies and if you look at our notified terminations or if you look at our at risk.
Speaker Change: As we go into 'twenty four I feel like we're in a meaningfully better position than we were going into 2023.
Speaker Change: Pointing out a handful of other things one I think we expect the contribution from OE, Jay in new vehicles Etfs and.
Rob Sharps: Thank you for the question. You know, our base case for 2024 is that we will have outflows, but we do expect improvement from 2023. First, the investment strategies with the most substantial outflows in 2022 and 2023 had much better performance in 2023. That should translate into lower client redemptions and improved sales over time. And, in fact, we are seeing evidence of that already.
Speaker Change: SMA to build going forward I feel like.
Speaker Change: We are beginning to see some momentum build there and when we combine all of that with some early stage sales momentum from some of our strategic initiatives I am confident this will be a better year.
Speaker Change: How much better I would say is to be determined to some extent I think it is dependent on continued execution from an investment performance perspective.
Speaker Change: It's contingent on risk appetites in the marketplace and levels of volatility it's contingent on.
Rob Sharps: You're beginning to see improvements in gross sales in some of those strategies. And if you look at our notified terminations, or if you look at our at-risk, As we go into 24, I feel like we're in a meaningfully better position than we were going into 2023. I'd point out a handful of other things.
Speaker Change: Some.
Speaker Change: More greater risk appetite and lengthening time horizons as some of the money on the sidelines re engages and.
Speaker Change: Extends time horizons.
Rob Sharps: One, I think we expect the contribution from OHA and new vehicles, ETFs, and SMA to build going forward. I feel like we are beginning to see some momentum build there. And when we combine all of that with some early stage sales momentum from some of our strategic initiatives, I'm confident that this will be a better year. But how much better, I'd say, is to be determined.
Speaker Change: But as I look across our distribution channels and across our strategies. There are a number of areas, where I'm encouraged first and foremost target date, we had an excellent year in 2023.
Speaker Change: We expect another strong year in 2020 for January retirement date flows were just shy of $3 billion.
Rob Sharps: To some extent, I think it is dependent on continued execution from an investment performance perspective. It's contingent on risk appetites in the marketplace and levels of volatility. It's contingent on greater risk appetite and lengthening time horizons as some of the money on the sidelines re-engages and extends time horizons. But as I look across our distribution channels and across our strategies, there are a number of areas where I'm encouraged. First and foremost, the target date. We had an excellent year in 2023. We expect another strong year in 2024. January retirement date flows were just shy of $3 billion.
Speaker Change: We had net flows and target dates in Q4, which is unusual seasonally.
Speaker Change: Modest, but nonetheless, first Q4, where we've had positive flows since 2019, but beyond that whether it's in Rps core market or U S high wealth or our individual investment there are pockets where.
Speaker Change: I think we are beginning to see better trends so.
Speaker Change: In light of that I think we're pretty.
Speaker Change: Confident that we will have a better year in 2004 than we had in 'twenty three and I think will build momentum throughout the course of the year.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: For next question please.
Rob Sharps: And we had net flows and target dates in Q4, which is unusual seasonally. They were modest, but nonetheless, the first quarter where we've had positive flows since 2019. But beyond that, whether it's in the RPS core market or USI wealth or individual investment, there are pockets where I think we're beginning to see better trends. So in light of that, I think we're pretty confident that we will have a better year in 2024 than we had in 2023. And I think we'll build momentum throughout the course of the year.
Speaker Change: Our next question comes from the line of Mike Brown with <unk>. Your line is now open.
Michael J. Cyprys: Okay, great. Thank you for taking my question.
Michael J. Cyprys: I wanted to start with an OE Jay.
Michael J. Cyprys: How would you characterize the next chapter of the story there right. So.
Michael J. Cyprys: Whereas the investments around Ohh currently, whereas the incremental investment dollars going in for that for that business and then credit.
Michael J. Cyprys: Credit has $1 $5 billion of Investable capital can you just give us a view into how the monthly flows have been there in any view you have to perhaps where the flow is could progressed here in 2024.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Mike Brown with KBW. Your line is now, Okay, great.
Michael J. Cyprys: Sure.
Speaker Change: For the question, specifically with regard to old credit.
Speaker Change: Oh credits raised over $100 million since the end of September when we went effective with the SEC and we expect similar amount throughout the course of Q1 and momentum to build throughout the course of the year as we launch on additional advisor and broker dealer platforms.
Rob Sharps: Thank you for taking my question. I wanted to start with OHA, how would you characterize the next chapter of the story there? Right. So where are the investments around OHA currently? Where are the incremental investment dollars going into that for that business? And then Ocredit has one point five billion of investable capital. Can you give us a view into how the monthly flows have been there and any view you have into perhaps where the flows could progress here in twenty twenty four? Sure.
Speaker Change: Yes, I'd say, it's a it's a very competitive market for.
Speaker Change: Private credit in the wealth channel and non traded Bdcs and benign credit environment has made it difficult to differentiate on performance, but we continue to be very confident that the combination of T Rowe price and Ohh home office relationships in the wealth channel.
Rob Sharps: Thank you for the question. Specifically, with regard to O-credit, O-credit's raised over $100 million since the end of September when we went effective with the SEC, and we expect a similar amount throughout the course of Q1 and momentum to build throughout the course of the year as we launch on additional advisor and broker-dealer platforms. I'd say it's a very competitive market for private credit in the wealth channel and non-traded BDCs, and the benign credit environments made it difficult to differentiate on performance, but we continue to be very confident that the combination of T. Rowe Price and OHA's home office relationships in the wealth channel and T. Rowe Price's field support combined with OHA's long-term track record in private credit and relationships with issuers will lead to success.
Speaker Change: And T Rowe Price's field support combined with OE Chase long term track record in private credit and relationships with issuers will lead to success with both credit and follow on products. We are hearing from the wealth platforms that they are interested in and follow on products as they build their relationship with T Rowe price and OE Jay in private market alternatives.
Speaker Change: We're evaluating our alternatives there.
Speaker Change: Take a step back with regard to OE J P basis, a U M.
Speaker Change: Alternatives for US was up 10% in 2023.
Rob Sharps: With both O credit and follow-on products, we are hearing from the wealth platforms that they're interested in follow-on products as they build their relationship with T. Rowe Price and OHA and private market alternatives, and we're evaluating our alternatives there. Look, if you take a step back with regard to OHA, fee-basis AUM in alternatives for us was up 10% in 2023. They have just under $12 billion in capital commitments that are uninvested at this point.
Speaker Change: Just under $12 billion in capital commitments.
Speaker Change: Our uninvested at this point.
Speaker Change: You will see a redemption in January when we report month lease for slightly over $1 billion in the alternatives category, but even despite that we're pretty confident that we'll see a building momentum in 2024, and we expect an acceleration in flows this year.
Speaker Change: I think it's important to remember that some of the capital raised for <unk> in 2023 was for distressed and deployment as trigger based so that only will go into flows as it's deployed but if you look at the underlying performance of Ohh strategies. It's very strong if you look at our pipeline, it's healthy and it's.
Rob Sharps: You will see a redemption in January when we report monthlies for slightly over a billion dollars in the alternatives category, but even despite that, we're pretty confident that we'll see OHA building momentum in 2024, and we expect an acceleration in flows this year. I think it's important to remember that some of the capital raised for OHA in 2023 was for distressed, and deployment is trigger-based, so that only will go into flows as it's deployed. But if you look at the underlying performance of OHA's strategies, it's very strong.
Speaker Change: Strong as its been since we closed the deal in private credit in particular and OE Chegg is in the market launching OLED, which is a dedicated senior private lending funds and that's a part of the market where demand has been strong and it's very early days there, but I would say initially interest has been encouraging from seed and anchor investors. So collectively when we look at.
Rob Sharps: If you look at our pipeline, it's healthy and as strong as it's been since we closed the deal, and private credit, in particular. And OHA is in the market launching OLEN, which is a dedicated senior private lending fund, and that's a part of the market where demand has been strong. It's very early days there, but I would say interest has been encouraging from seed and anchor investors. So collectively, when we look at the contribution from OHA in 2024 and beyond, we're confident that it will build and become more substantial over the course of this year and years to come. Thank you.
Speaker Change: The contribution from OE, Jay in 'twenty, four and beyond.
Speaker Change: Confident that it will build and become more substantial over the over the course of this year and in years to come.
Speaker Change: Thank you one moment for our next question. Please.
Speaker Change: Our next question comes from the line line of Craig Siegenthaler with Bank of America. Your line is now open.
Craig William Siegenthaler: Good morning, Rob, Eric I hope everyone's doing well Mike.
Craig William Siegenthaler: My question is on the fixed income flows which affected negatively in the quarter. So some of that I think was seasonal unrelated to tax loss harvesting so not reoccurring.
Craig William Siegenthaler: How should we think about the forward trajectory, especially given the potential for industry rebalancing and duration extensions with fed rate cuts around the quarter and also record money market AUM on the sidelines.
Craig William Siegenthaler: Yes.
Operator: One moment for our next question. Our next question comes from the line of Craig Siegenthaler with Bank of America. Your line is now open. Good morning, Rob, and Eric. Doing well. My question is on, Some of that did not reoccur.
Speaker Change: Great. Thank you for the question I think we do anticipate is some of that money comes off the sidelines.
Speaker Change: It will look to fixed income given.
Speaker Change: Higher rates and better potential for absolute return.
Rob Sharps: But how should we think about the four... found, Yeah, Craig, thank you for the question. I think we do anticipate that as some of that money comes off the sidelines, it will look to fixed income given higher rates and better potential for absolute return. I think we're underestimated in terms of our fixed income capabilities. We have a strong fixed income team and a global platform with a number of strategies with good results across plus sectors and in the core, including global multi-sector and QM bonds. We're also very focused on launching new vehicles and deepening our go-to-market and sales capabilities in fixed income. With higher rates offering more attractive total returns, we intend to compete aggressively, specifically as it relates to Q4 flows.
Speaker Change: I think look I think we are underestimated in terms of our fixed income capabilities. We have a strong fixed income team and global platform with a number of strategies with good results across plus sectors and in the core including global multi sector in Q M. Board. We're also very focused on launching new vehicles and deepening our go to market and sales capabilities.
Speaker Change: And fixed income.
Speaker Change: With higher rates offering more attractive total returns we intend to compete aggressively.
Speaker Change: Specifically as it relates to Q4 flows.
Speaker Change: Much of what you saw was a.
Speaker Change: Sizable redemption in a short duration strategy and I wouldn't consider that to be predictive.
Rob Sharps: Much of what you saw was a sizable redemption in a short duration strategy, and I wouldn't consider that to be predictive of flows going forward. We also have a pretty meaningful stable value and floating rate franchise, which really benefited from the rate environment as people wanted to be short duration and rates were rising in 2022. And we saw the other side of that a little bit in 2023.
Speaker Change: Flows going forward, we also have a pretty meaningful stable value in floating rate franchise, which really benefited from the rate environment.
Speaker Change: People wanted to be short duration and rates were rising in 2022, and we saw the other side of that a little bit in 2023, but as I think about our potential in fixed income, it's an area, where we're making investments and we are intent on growing going forward.
Speaker Change: Thanks, I would just.
Rob Sharps: But as I think about our potential in fixed income, it's an area where we're making investments, and we're intent on growing going forward. Thank you. I would just simply add, I think Rob covered it well, Araf Hussein, who is leading our fixed income team, is highly motivated. The team is highly motivated to really emphasize to the market broadly our capabilities, and I think they have put together a plan to do that. And as Rob mentioned, the sector is where I think we have very strong performance. I would just add to that, to the extent that taxes come back into view for folks as the year winds on, our municipal team is also very strong, and we have some interesting products in that area as well. Thank you. The next question comes from the line of Kenneth Worthington with J.P. Morgan. Your line is now open. Hi, good morning.
Speaker Change: I would just simply add I think Rob covered it well.
Speaker Change: Eric Hussain, who is leading our fixed income team is highly motivated the team is highly motivated to really emphasize to the market broadly our capabilities and I think have put together a plan to do that and.
Speaker Change: And as Rob mentioned, the sectors, where I think we have very strong performance I would just add to that to the extent that taxes come back into view for folks as the year winds on our municipal team is also very strong and we have some interesting product in that area as well.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Kenneth Worthington with Jpmorgan. Your line is now open.
Kenneth Worthington: Hi, good morning, Thanks for taking the question.
Kenneth Worthington: Investors domiciled outside the U S account for I think eight 6% of your business today.
Operator: Thanks for taking the question. Investors domiciled outside the US account for, I think, 8.6% of your business today. Where, sorry, where do you expect that to go? I'm sorry.
Kenneth Worthington:
Kenneth Worthington: Sure.
Kenneth Worthington: Im sorry, where do you expect that to go.
Speaker Change: I'm sorry.
Rob Sharps: First, what portion of your resources is focused outside the U.S.? Second, you announced some management changes on the non-U.S. side of the business. Can you flesh out the opportunity there and what you hope the new managers will accomplish? And third, what do you expect for growth in the non-U.S. business versus the U.S. over the intermediate term? Okay, Ken, one more time.
Speaker Change: First what portion of your resources are focused outside the U S. Second you announced some management changes on the non U S side of the business can you flesh out the opportunity there.
Speaker Change: And what you hope to new managers will accomplish and third what do you expect for growth in the non U S business versus the U S over the intermediate term.
Rob Sharps: The last question was relative growth in EMEA and APAC versus the U.S. What were the other two? Yeah. The first is, what portion of your resources are focused on the non-U.S. business? And you announced some management changes in the non-U.S. business earlier this week or late last week. What are the opportunities you want those new managers to focus on? Yeah. From that last question, I'll take the last one first
Speaker Change: Okay, Ken one more time. The last question was relative growth in EMEA and APAC versus U S. What were the other two the first is what portion of your resources are focused on the non U S business and you announced some management changes to the non U S business I think earlier this week or late last.
Speaker Change: Weak.
Speaker Change: What are the opportunities you want those new managers to focus on.
Speaker Change: Yeah.
Ken: I'll take the last one first we expect relative growth outside of the U S to be greater than what it is in the U S. But the arithmetic of that's not that challenging given that we have.
Rob Sharps: We expect relative growth outside of the U.S. to be greater than what it is in the U.S., but the arithmetic of that is not that challenging, given that we have a relatively small base from which we would need to grow off of. We have a number of focus markets outside of the U.S., both in Asia Pacific and EMEA, and those are the areas where we're really concentrating our resources-Japan, Australia, Germany, Italy, the U.K., and Canada. And we would expect each of those markets to meaningfully outgrow the U.S. over the course of the next several years. In fact, I would say if you were to look at our flow trends before 2023, we had positive contribution reasonably consistently, I think in each year over the last many years from AIPAC, and I think you'd have to go back a couple years, but we had several years of positive contribution from EMEA before 2021.
Ken: A relatively small base.
Ken: From which that we would need to grow off of.
Ken: We have.
Ken: A number of focus markets outside of the U S. Both in Asia Pacific and EMEA up and those are the areas, where we're really concentrating our resources, Japan, Australia, Germany, Italy, the UK and Canada.
Ken: We would expect each of those markets to meaningfully outgrow the U S. Over the course of the next several years in fact I would say if you. If you were to look at our flow trends before 2023, we had positive contribution reasonably consistently.
Ken: In each year over the last many years from APAC and I think you'd have to go back a couple of years, but we had several years ago.
Ken: Positive contribution from <unk> before 2021 in.
Rob Sharps: In terms of the resources outside of the U.S., I think it's important first to realize that some of those are decked against global investment strategies, so not all of them are specific to AUM raised outside of the U.S., but we have around 8,000 associates, and about 1,300 of those associates are domiciled outside of the U.S. Again, a number of those people are investment professionals that we are leveraging for global and multi-regional strategies, so I think if you're thinking about the profitability of those regions, that may not be-the associate account may not be the right way to look at.
Ken: In terms of the resources outside of the U S. I think it's important first to realize that some of those are decked against the global investment strategy. So not all of them are specific to <unk>.
Ken: AUM raised outside of the U S. But we have roundly 8000 associates and about 1300 of those associates are domiciled outside of the U S.
Ken: Again, a number of those people are investment professionals that we are leveraging for global and multi regional strategy. So I think if youre thinking about the profitability of those regions that may not be the associate count may not be the right way to look at what I will say is that we are profitable if you look at.
Rob Sharps: What I would say is that we are profitable if you look at our EMEA and our AIPAC businesses, and you look at the revenue from clients domiciled there, and you get direct expenses and allocate some other meaningful expenses against those. We're profitable in those areas, and I also think that we've built ahead, so those are areas where we can get some very meaningful leverage off of the existing investments that we've made in distribution, as well as the global investment platform that we've developed. Thank you. One moment for our next question. Our next question comes from the line of Brennan Hawkin with UBS. Your line is now open. Good morning.
At our MAA and our APAC business is and you look at the revenue from clients domiciled, there and you get direct expenses and allocate some other meaningful expenses against those were profitable in those areas and I also think that we've built ahead. So those are areas, where we can get some very meaningful leverage off.
The existing investments that we've made in distribution.
Well as the global investment platform that we've developed.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Brennan Hawken with UBS. Your line is now open.
Brennan Hawken: Good morning, Thanks for taking my question.
Operator: Thanks for taking my question. Um, Jennifer, I know you said that the fee rate, www.globalonenessproject.org, is all in order from time to time. So I think the number I'd given in the commentary, thanks, Brennan, for the question, $25 million was the amount for Q4. And as you know, OHA has a number of performance-based fees. These are the ones specifically that crystallize in the year.
Brennan Hawken: Jennifer I know you said that the fee rate ex performance fee would be flat quarter over quarter, but is it possible to quantify that impact in dollars and is it right that those performance fees come from SMA is within <unk> and should we think about that just happening in the fourth quarter from time to time.
Jennifer: So I think the number had given in the commentary. Thanks Brennan for the question was $25 million was the amount for Q4.
Jennifer: And as you know.
Jennifer: He has a number of performance based fees. These are the ones specifically that crystallized in year and yes. That's typically the kind of a calculus b and yes. Most of those happened during the fourth quarter, but they can happen through the year.
Jen Dardis: And yes, that's typically the kind of account it would be. And yes, most of those happen during the fourth quarter, but they can happen throughout the year. Thank you. Please take a moment for our next question. And our next question comes from the line of Alexander Blostein with Goldman Sachs. Your line is now open. Hey, good morning, everybody.
Speaker Change: Thank you.
Speaker Change: One moment for our next question please.
Speaker Change: And our next question comes from the line of Alexander <unk> with Goldman Sachs. Your line is now open.
Operator: Thanks for the question. I was hoping you could expand on your buyback commentary, seeing a bit of a pickup, I guess, in the fourth quarter. And I think you alluded to remaining active on share repurchases so far in the first quarter. Given T. Rowe's robust balance sheet and obviously strong cash flow generation, can you just kind of help us frame what the buyback opportunity is for 2024? Sure. Our priorities with regard to capital allocation haven't changed.
Alexander: Hey, good morning, everybody. Thanks for the question I was hoping you could expand on your buyback commentary seeing a bit of a pickup I guess in the fourth quarter and I think you alluded to remaining active on share repurchases. So far in the first quarter.
Alexander: Given to euros robust balance sheet, and obviously strong cash flow generation can you just kind of help us frame what the buyback opportunity is for 2024. Thanks.
Alexander: Sure.
Speaker Change: Priorities with regard to capital allocation haven't changed we want to first and foremost invest in the company second.
Rob Sharps: We want to, first and foremost, invest in the company, and second, protect and raise the regular dividend. And put ourselves in a position to have the flexibility to make appropriate acquisitions as opportunities present themselves. But we also generate a lot of cash flow and have historically been opportunistic with regard to our share repurchase. I'd say what changed at the margin last year was that the buyback was more muted given lower free cash flow after the dividend.
Speaker Change: Protecting raised our regular dividend.
Speaker Change: And put ourselves in a position to have the flexibility to make appropriate acquisitions as the opportunities present themselves.
Speaker Change: But we also generate a lot of cash flow and historically have been opportunistic with regard to our share repurchase.
Speaker Change: I'd say what has changed at the margin last year.
Speaker Change: Is that the buyback was more muted given lower free cash flow after the dividend.
Rob Sharps: You know, I think if you think about the order of magnitude for potential over the course of 2024, based on our planning, it's not going to go back to the billion dollars a year or the levels that you saw in years before 2023. But, you know, I think we will be opportunistic, and we'll take advantage of opportunities in the marketplace to repurchase shares. And over time, I have an objective of taking the share count lower. So, you know, I think you could think about the levels of 2023 as a base case. But there are a lot of contingencies, and Alex, there could be quite a bit of variability around that.
Speaker Change: I think if you think about the order of magnitude for potential over the course of 2024 based on our planning.
Speaker Change: It's not going to go back to the $1 billion a year are the levels that you saw in years before 2023.
Speaker Change: But I think we will be opportunistic and we will take advantage of opportunities in the marketplace to repurchase shares and over time I have an objective of taking the share count lower so.
Speaker Change: I think you could think about the levels of 2023 as a base case, but there are a lot of there are a lot of contingencies and Alex there could be quite a bit of variability around that and as you note.
Rob Sharps: And, you know, as you note, we do have a strong balance sheet. And, you know, given the right opportunity, you certainly would have the potential to outspend cash flow, but that's not what's in our base case.
Speaker Change: We do have a strong balance sheet and kind of given the right opportunity. We certainly would have the potential to outspend cash flow, but that's not that's not our base case.
Operator: Great. Thank you. One moment for our next question. Our next question comes from the line of Michael Cyprys with Morgan Stanley. Your line is now open.
Speaker Change: Great.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: And then for our next question.
Speaker Change: Our next question comes from the line of Michael Cyprus with Morgan Stanley. Your line is now open.
Rob Sharps: Great, thanks so much for taking the time to answer the question. I just wanted to come back to your commentary on the Retiree Inc. acquisition. I was hoping you could maybe elaborate a bit on the strategic rationale, the opportunities that you see there, how you see this helping enhance the growth profile of T. Rowe, and then, more broadly, if you could just comment on how you're thinking about M&A at this point, where it could be most additive to T. Rowe. Yeah, specifically as it relates to retirees, they have a set of proprietary algorithms that help retirement investors make the transition from accumulation to decumulation and look at optimizing Social Security elections, as well as which assets to liquidate first and when to take withdrawals from your tax-deferred retirement investments.
Michael J. Cyprys: Great. Thanks, so much for taking the question just wanted to come back to your commentary on the Retiree Inc. Acquisition I was hoping you could maybe elaborate a bit on the strategic rationale of the opportunity set that you see there how you see this helping enhance the growth profile of T. Rowe and then more broadly if you could just comment on how youre thinking about M&A at this point, where it can be most additive to <unk>.
Michael J. Cyprys: Thank you.
Speaker Change: Yeah, specifically as it relates to retiree.
Speaker Change: They have.
Speaker Change: A set of proprietary algorithms that help.
Speaker Change: Retirement investors make the transition from accumulation to Decumulation and look at optimizing social security elections.
Speaker Change: As well as which assets to liquidate first and when to take.
Speaker Change: Withdrawals from your tax deferred retirement investments, yes, we showed a slide in the supplement with regard to the portion of our AUM that are in defined contribution plans as well as retirement related overall and.
Rob Sharps: We showed a slide in the supplement with regard to the portion of our AUM that is in defined contribution plans, as well as overall. And if you think about our individual investor business, one of our strategic initiatives is retirement advisory services. So for our advisory capabilities to be able to incorporate differentiated guidance with regard to how to most tax-efficiently support your lifestyle and cash flow needs in retirement, that's value-add. And that's really where we rolled it out initially.
Speaker Change: If you think about our individual investor business, one of our strategic initiatives as retirement advisory services. So for our advisory capabilities to be able to do incorporate differentiated guidance with regard to how to most tax efficiently.
Speaker Change: Your lifestyle and cash flow needs in retirement, that's value add and that's really where we've rolled it out initially longer term, we see a tremendous amount of opportunity to incorporate it into for instance, our record keeping offerings to differentiate the offering for plan sponsors and participants, but also I think we have a meaningful potential to partner with.
Rob Sharps: Longer term, we see a tremendous amount of opportunity to incorporate it into, for instance, our record-keeping offerings to differentiate the offerings for plan sponsors and participants. But also, I think we have meaningful potential to partner with people in the wealth channel through our intermediary partners. I think it's very early days for us to explore what the potential is. In terms of our approach to M&A, it's still the same. We're looking for things that add capabilities that make us more important to our clients and that fit strategically and culturally and make financial sense.
Speaker Change: With people in the wealth channel with our intermediary partners.
Speaker Change: So I think it's very early days for us exploring what the potential is in terms of our approach to M&A. It's still the same where we're looking for things that add capabilities that make us more important to our clients.
Speaker Change: And that fit strategically and culturally and make financial sense.
Rob Sharps: Thank you. I'm currently showing no further questions at this time. I'd like to hand the conference back over to Mr. Sharps for closing remarks. All right. Very good.
Speaker Change: Thank you.
Mr. Sharp: I'm currently showing no further questions at this time I'd like to hand, the conference back over to Mr. Sharp for closing remarks.
Rob Sharps: Thank you. Well, thank you all for joining us today and for your interest in T. Rowe Price. As I said at the outset, 2023 was a challenging year for us, but we also made a lot of progress. Better investment performance, a lot of progress with regard to our strategic work to position us for future growth, and that's beginning to translate into results that give us some confidence that we do see better days ahead and have the potential to continue to deliver great value for clients, associates, and shareholders.
Mr. Sharp: Alright, very good thank you.
Mr. Sharp: You all for joining us today and for your interest and T Rowe price.
Sharp: As I said at the outset 23 was a challenging year for us, but we also made a lot of progress.
Mr. Sharp: Better investment performance a lot of advancement with regard to our strategic work to position us for future growth and Thats beginning to translate into results to give us some confidence that we do see better days ahead and have the potential to continue to deliver great value for clients associates and shareholders. So again, thank you and good luck.
Operator: So, again, thank you and good day. This concludes today's conference call. You may now disconnect. Thank you for your participation. Everyone have a wonderful day, www.patreon.com www.facebook.com www.instagram.com www.twitter.com
Mr. Sharp: Right.
Speaker Change: This concludes today's conference call you May now disconnect. Thank you for your participation everyone have a wonderful day.
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